2025/10/03 by Pauline Corblet, Corblet, Pauline, Jeremy T. Fox +3
Economics, Econometrics and Finance · Decision Sciences · #Game Theory and Voting Systems #Labor market dynamics and wage inequality #Auction Theory and Applications
paper · pdf · doi:10.48550/arxiv.2510.02737
We introduce a model of dynamic matching with transferable utility, extending the static model of Shapley and Shubik (1971). Forward-looking agents have individual states that evolve with current matches. Each period, a matching market with market-clearing prices takes place. We prove the existence of an equilibrium with time-varying distributions of agent types and show it is the solution to a social planner's problem. We also prove that a stationary equilibrium exists. We introduce econometric shocks to account for unobserved heterogeneity in match formation. We propose two algorithms to compute a stationary equilibrium. We adapt both algorithms for estimation. We estimate a model of accumulation of job-specific human capital using data on Swedish engineers.